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AN ACT
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relating to trade-in credit agreements offered in connection with |
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certain motor vehicle retail installment contracts. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 348.001, Finance Code, is amended by |
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adding Subdivision (11) to read as follows: |
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(11) "Trade-in credit agreement" means a contractual |
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arrangement under which a retail seller agrees to provide a |
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specified amount as a motor vehicle trade-in credit for the |
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diminished value of the motor vehicle that is the subject of the |
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retail installment contract in connection with which the trade-in |
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credit agreement is offered if the motor vehicle is damaged but not |
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rendered a total loss as a result of a collision accident, with the |
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credit to be applied toward the purchase or lease of a different |
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motor vehicle from the retail seller or an affiliate of the retail |
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seller. A trade-in credit agreement is a separate agreement from a |
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retail installment contract and is not a term of the retail |
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installment contract. |
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SECTION 2. Section 348.005, Finance Code, is amended to |
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read as follows: |
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Sec. 348.005. ITEMIZED CHARGE. An amount in a retail |
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installment contract is an itemized charge if the amount is not |
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included in the cash price and is the amount of: |
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(1) fees for registration, certificate of title, and |
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license and any additional registration fees charged by a deputy as |
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authorized by rules adopted under Section 520.0071, Transportation |
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Code; |
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(2) any taxes; |
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(3) fees or charges prescribed by law and connected |
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with the sale or inspection of the motor vehicle; and |
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(4) charges authorized for insurance, service |
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contracts, warranties, automobile club memberships, trade-in |
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credit agreements, or a debt cancellation agreement by Subchapter |
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C. |
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SECTION 3. Subchapter B, Chapter 348, Finance Code, is |
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amended by adding Section 348.125 to read as follows: |
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Sec. 348.125. TRADE-IN CREDIT AGREEMENTS OFFERED IN |
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CONNECTION WITH RETAIL INSTALLMENT CONTRACTS. (a) A retail seller |
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may, at the time a retail installment contract is executed, offer to |
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sell to a retail buyer a trade-in credit agreement or similarly |
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named agreement. |
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(b) A trade-in credit agreement is not considered an |
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insurance product. |
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(c) To ensure the faithful performance of a retail seller's |
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obligations to a retail buyer under a trade-in credit agreement, |
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the retail seller must be insured under a contractual liability |
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reimbursement policy approved by the commissioner of insurance and |
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issued for the benefit of Texas residents. |
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(d) In addition to other disclosures required by state or |
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federal law, if a retail seller offers to a retail buyer a trade-in |
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credit agreement, the retail seller shall give the retail buyer at |
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the time the retail installment contract is executed a copy of the |
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written trade-in credit agreement and written notice that the |
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retail buyer: |
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(1) is not required to purchase the trade-in credit |
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agreement as a condition for approval of the retail installment |
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contract; |
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(2) is entitled to cancel the trade-in credit |
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agreement before the 31st day after the date the retail installment |
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contract is executed and receive a full refund; |
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(3) may terminate the trade-in credit agreement at any |
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time on or after the 31st day after the date the retail installment |
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contract is executed and receive a pro rata refund minus any |
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applicable cancellation fee which may not exceed $50; and |
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(4) has been provided a clear and concise disclosure |
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of the amount of the credit available during the term of the |
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trade-in credit agreement. |
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(e) The amount charged for a trade-in credit agreement |
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offered in connection with a retail installment contract may not |
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exceed five percent of the cash price of the motor vehicle that is |
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the subject of the retail installment contract, including any |
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attached accessories and excluding the price of services related to |
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the sale, the price of service contracts, taxes, and fees for |
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license, title, and registration. |
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(f) A trade-in credit agreement must require the retail |
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buyer to provide proof of insurance settlement documents in order |
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to obtain the credit. A trade-in credit agreement may not require |
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the retail buyer to provide any other documentation in order to |
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obtain the credit. |
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(g) If a retail seller enters a trade-in credit agreement |
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with a retail buyer, the retail seller must comply with the terms of |
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the trade-in credit agreement in connection with the purchase or |
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lease of a subsequent motor vehicle. A retail seller must provide |
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any credit required under a trade-in credit agreement at the time of |
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the purchase or lease of a subsequent motor vehicle. |
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(h) The benefit to be provided in connection with a trade-in |
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credit agreement must bear a reasonable relationship to the amount |
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charged for the trade-in credit agreement and the amount, term, and |
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conditions of the retail installment contract. |
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SECTION 4. Sections 348.208(b) and (c), Finance Code, are |
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amended to read as follows: |
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(b) A retail installment contract may include as a separate |
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charge an amount for: |
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(1) motor vehicle property damage or bodily injury |
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liability insurance; |
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(2) mechanical breakdown insurance; |
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(3) participation in a motor vehicle theft protection |
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plan; |
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(4) insurance to reimburse the retail buyer for the |
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amount computed by subtracting the proceeds of the buyer's basic |
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collision policy on the motor vehicle from the amount owed on the |
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vehicle if the vehicle has been rendered a total loss; |
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(5) a warranty or service contract relating to the |
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motor vehicle; |
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(6) an identity recovery service contract; [or] |
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(7) a debt cancellation agreement if the agreement is |
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included as a term of a retail installment contract under Section |
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348.124; or |
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(8) a trade-in credit agreement. |
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(c) Notwithstanding any other law, service contracts, [and] |
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debt cancellation agreements, and trade-in credit agreements sold |
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by a retail seller of a motor vehicle to a retail buyer are not |
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subject to Chapter 101 or 226, Insurance Code. |
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SECTION 5. This Act takes effect September 1, 2017. |
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______________________________ |
______________________________ |
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President of the Senate |
Speaker of the House |
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I certify that H.B. No. 2339 was passed by the House on May 4, |
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2017, by the following vote: Yeas 143, Nays 0, 2 present, not |
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voting. |
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______________________________ |
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Chief Clerk of the House |
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I certify that H.B. No. 2339 was passed by the Senate on May |
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24, 2017, by the following vote: Yeas 31, Nays 0. |
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______________________________ |
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Secretary of the Senate |
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APPROVED: _____________________ |
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Date |
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_____________________ |
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Governor |